Hong Kong does not intend to have relaxed regulations on virtual assets as it seeks to become a hub of the international industry, a senior official said in comments coming just weeks before the new licensing rules take effect. for cryptocurrency exchanges.
"Our regulations will be strict," said Eddie Yue Wai-man, executive director of the Hong Kong Monetary Authority (HKMA)he said at the Bloomberg Wealth Asia summit on Tuesday.
"We will let the industry develop and innovate. We will let them create the ecosystem here, and that actually brings a lot of excitement," Yue added. "But that doesn't mean light regulation."
As governments around the world begin to rein in the carefree crypto industry following a series of crises last year, Hong Kong has re-emerged as an attractive destination for some businesses after the city. declared last October its ambition to become a global hub of virtual assets.
In February, the Securities and Futures Commission (SFC)Hong Kong's securities watchdog, proposed new rules for retail participation in cryptocurrency tradingsaying that retail investors will be able to buy tokens with large market caps, such as bitcoin and ether, on licensed virtual asset platforms.
Under rules that come into effect next month, all centralized virtual asset trading platforms operating in Hong Kong or marketing their services to Hong Kong investors will be required to obtain a license from the regulator.
The HKMA is also preparing a compulsory licensing regime for stablecoin-related activities by 2024, the city's de facto central bank said in February in a document that concluded a consultation launched last year. The rules, as currently written, would require that the value of the reserve assets backing a stablecoin, which is typically pegged to a fiat currency or a basket of currencies, equals the value of the tokens in circulation at all times. .
"What we want to do in Hong Kong is to say that this trend will continue. Let's put in place the right regulatory framework using the principle of same business, same risk and same regulation," Yue said Tuesday.
"If any participant [thinks] because the regulation is too strict, they can go elsewhere," Yue added.
While continuing to reiterate its commitment to virtual assets amid the recent market turmoil, the government has also reminded the public of the potential risks involved in crypto markets.
Last month, in the biggest crypto event in the city since Hong Kong pledged its virtual asset targets last year, the SFC also suggested that more oversight of decentralized finance (DeFi) platforms would be necessary. People who "operate or conduct" DeFi activities should be subject to Hong Kong's licensing requirements, Keith Choy, acting head of SFC's broker division, said at the conference. Hong Kong Web3 Festivalnoting that "the provision of automated business services" is a regulated activity, whether decentralized or not.
At a separate summit last month, HKMA CEO Clara Chan warned that many blockchain use cases โmay not involve intrinsic valueโ and could therefore be subject to extreme price and valuation volatility.
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